Get your free copy of Editor's Digest
FT editor Roula Khalaf picks her favourite stories in this weekly newsletter.
The author is Chief Economist at the Asian Development Bank. Contributors include Aiko Yoshikawa, Senior Economist at the Asian Development Bank and lead author of “Healthy Ageing in Asia.”
Rapid ageing in the Asia-Pacific region not only raises the question of who will foot the bill for rising pension costs, but also how to meet growing physical and mental health care needs.
The region's population over 60 is expected to double in the coming decades. Currently, on average 57% of this group have at least one non-communicable disease (the most common are high blood pressure, diabetes and heart disease), yet only four in 10 attend regular medical check-ups. Around a third experience severe depression, and many feel isolated and lonely.
By 2050, this age group will soar to 1.2 billion people, accounting for roughly a quarter of the population of developing Asia-Pacific. This demographic change is occurring at an unprecedented speed, driven by a sharp decline in fertility rates and emerging at an earlier stage of development than developed countries. Increasing life expectancy reflects the region's successful socio-economic development, but at the same time, it also poses increasingly urgent challenges.
Of paramount importance is how to ensure the well-being of a rapidly growing elderly population. Health is the most important aspect of well-being because it directly impacts quality of life, but it is also important for other aspects such as productive work, economic stability, family and social life.
This will require the expansion of health and long-term care services. This will likely be costly, but experience in developed countries shows that budget resources can be increased by raising tax revenues and encouraging growth-oriented spending. In the long term, increased investment in health could lead to a “silver dividend”: a healthier older population will be more productive and require less care. In fact, the Asian Development Bank estimates that the currently untapped workforce capacity of older people could boost the GDP of some Asian countries by up to 1.5%.
Moreover, disease prevention offers significant health and economic benefits. Community-based programs have shown promising results in smoking reduction, blood pressure control, diabetes management, and health screening. Promotion of physical activity and healthy foods and dietary habits can also minimize the burden of disease.
Beyond health policies, policymakers must also address related challenges such as widespread informal employment and significant gender inequalities, with informal workers often having little protection at work and many with no choice but to continue working until their health deteriorates.
Although women can expect to live longer than men, they are more susceptible to illness and depression, with 59% of older women in Asia Pacific suffering from at least one non-communicable disease. At the same time, older women have more limited economic opportunities, fewer opportunities to receive pensions and may have fewer resources to access healthcare than men.
These challenges are interrelated and require Asia-Pacific governments to take a comprehensive approach. A top priority is to expand pension coverage and ensure adequate benefits for the poorest.
Policies can also make it easier for older people to work, for example by providing incentives to employers to hire and keep older workers and adjust their work patterns. Outdated statutory retirement ages can be raised over time and made more flexible. Seniority-based compensation systems prevalent in many local economies can also be reformed to ensure that wages better reflect the productivity of older people.
Governments can and must do more to help people plan and prepare for retirement. Policies should focus on lifelong preparation and encourage healthy lifestyles as well as continuous learning to update and acquire new skills, and long-term financial planning for retirement. Early investment will be key to success.
The costs of inaction are high, ranging from unhappiness among older people to growing inequality, lack of social cohesion, and ultimately rising health and pension costs. The potential reward is longer, healthier, and more productive lives for future older generations.
Now is the time for governments to help people in the Asia-Pacific region realize their aspirations to retire healthily and prosper.
